As filed with the Securities and Exchange Commission on October 22, 2001

                                                       Registration No. 333-____

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                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                 ---------------

                                    FORM S-8

                             REGISTRATION STATEMENT
                                      UNDER
                           THE SECURITIES ACT OF 1933

                                ----------------

                         PRINCIPAL FINANCIAL GROUP, INC.
             (Exact name of registrant as specified in its charter)

                  DELAWARE                                   42-1520346
      (State or other jurisdiction of                     (I.R.S. Employer
       incorporation or organization)                    Identification No.)

                                 711 HIGH STREET
                             DES MOINES, IOWA 50392
                    (Address of Principal Executive Offices)

              PRINCIPAL FINANCIAL GROUP, INC. STOCK INCENTIVE PLAN
              PRINCIPAL FINANCIAL GROUP LONG-TERM PERFORMANCE PLAN
              PRINCIPAL FINANCIAL GROUP, INC. DIRECTORS STOCK PLAN
          PRINCIPAL FINANCIAL GROUP, INC. EMPLOYEE STOCK PURCHASE PLAN
                            (Full title of the Plans)

                              KAREN E. SHAFF, ESQ.
                    SENIOR VICE PRESIDENT AND GENERAL COUNSEL
                         PRINCIPAL FINANCIAL GROUP, INC.
                                 711 HIGH STREET
                             DES MOINES, IOWA 50392
                                 (515) 247-5111
            (Name, address and telephone number of agent for service)

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                         CALCULATION OF REGISTRATION FEE

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                                          Proposed           Proposed
Title of                                   maximum            maximum
securities to be     Amount to be      offering price        aggregate            Amount of
registered            registered          per share        offering price      registration fee
----------------     -------------     --------------      --------------      ----------------
                                                                       
Common stock,        20,000,000 (1)          (2)           $400,000,000 (3)         $100,000
par value $ .01
per share

================================================================================

(1)  Consists of shares of common stock to be offered pursuant to the Principal
     Financial Group, Inc. Stock Incentive Plan, the Principal Financial Group
     Long-Term Performance Plan, the Principal Financial Group, Inc. Directors
     Stock Plan and the Principal Financial Group, Inc. Employee Stock Purchase
     Plan. Such indeterminate number of additional shares as may be issuable
     pursuant to the recapitalization provisions under the employee benefit
     plans described herein is hereby also registered.

(2)  Not applicable.

(3)  Computed pursuant to Rule 457(h) of the Securities Act solely for the
     purpose of determining the registration fee, based on an assumed price of
     $20.00 per share, which is the maximum of the proposed range of offering
     prices with respect to Principal Financial Group, Inc.'s initial public
     offering of common stock pursuant to Amendment No. 4 to the Registration
     Statement on Form S-1, file number 333-62558, as filed with the Securities
     and Exchange Commission on October 22, 2001.

                                     PART II

               INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

Item 3.  Incorporation of Documents by Reference

         Amendment No. 4 to Principal Financial Group, Inc.'s Registration
Statement on Form S-1, file number 333-62558, and related Prospectus, as filed
with the Securities and Exchange Commission on October 22, 2001, is incorporated
by reference in this Registration Statement. Information relating to Principal
Financial Group, Inc.'s common stock is set forth under the caption "Description
of Capital Stock and Change of Control Related Provisions" in the Registration
Statement on Form S-1.

         In addition, all documents subsequently filed by Principal Financial
Group, Inc. pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities
Exchange Act of 1934, prior to the filing of a post-effective amendment which
indicates that all securities offered hereby have been sold or which deregisters
all securities then remaining unsold, shall be deemed to be incorporated by
reference in this Registration Statement and to be a part hereof from the date
of filing such documents.

         Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Registration Statement to the extent that a statement
contained herein (or in any other subsequently filed document which also is
incorporated or deemed to be incorporated by reference herein) modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Registration Statement.

Item 4.  Description of Securities

         Not applicable.

Item 5.  Interests of Named Experts and Counsel

         None.

Item 6.  Indemnification of Directors and Officers

         Our directors and officers may be indemnified against liabilities,
fines, penalties and claims imposed upon or asserted against them as provided in
the Delaware General Corporation Law and our certificate of incorporation and
by-laws. Such indemnification covers all costs and expenses incurred by a
director or officer in his or her capacity as such. The board of directors, by a
majority vote of a quorum of disinterested directors or, under certain
circumstances, independent counsel appointed by

                                       3

the board of directors, must determine that the director or officer seeking
indemnification was not guilty of willful misconduct or a knowing violation of
the criminal law. In addition, the Delaware General Corporation Law and our
certificate of incorporation may, under certain circumstances, eliminate the
liability of directors and officers in a stockholder or derivative proceeding.

         If the person involved is not a director or officer of Principal
Financial Group, Inc., the board of directors may cause Principal Financial
Group, Inc. to indemnify, to the same extent allowed for our directors and
officers, such person who was or is a party to a proceeding by reason of the
fact that he or she is or was our employee or agent, or is or was serving at our
request as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise.

         We have policies in force and effect to insure our directors and
officers against such losses which they or any of them will become legally
obligated to pay by reason of any actual or alleged error or misstatement or
misleading statement or act or omission or neglect or breach of duty by such
directors and officers in the discharge of their duties, individually or
collectively, or as a result of any matter claimed against them solely by reason
of their being directors or officers. Such coverage is limited by the specific
terms and provisions of the insurance policies.

Item 7.  Exemption from Registration Claimed

         Not applicable.

Item 8.  Exhibits

         An Exhibit Index, containing a list of all exhibits filed with this
Registration Statement, is included on page 10.

Item 9.  Undertakings

         (a)   Rule 415 Offering. The undersigned Registrant hereby undertakes:

         (1)   To file, during any period in which offers or sales are being
     made, a post-effective amendment to this Registration Statement:

               (i) To include any Prospectus required by section 10(a)(3) of the
         Securities Act of 1933, unless the information is contained in
         periodic reports filed by the Registrant pursuant to section 13 or
         section 15(d) of the Exchange Act of 1934 that are incorporated by
         reference in the Registration Statement;

                                       4

               (ii) To reflect in the Prospectus any facts or events arising
          after the effective date of the Registration Statement (or the most
          recent post-effective amendment thereof) which, individually or in the
          aggregate, represent a fundamental change in the information set forth
          in the Registration Statement, unless the information is contained in
          periodic reports filed by the Registrant pursuant to section 13 or
          section 15(d) of the Exchange Act that are incorporated by reference
          in the Registration Statement;

               (iii) To include any material information with respect to the
          plan of distribution not previously disclosed in the Registration
          Statement or any material change to such information in the
          Registration Statement.

         (2) That, for the purpose of determining any liability under the
     Securities Act, each such post-effective amendment shall be deemed to be a
     new registration statement relating to the securities offered therein, and
     the offering of such securities at that time shall be deemed to be the
     initial bona fide offering thereof.

         (3) To remove from registration by means of a post-effective amendment
     any of the securities being registered which remain unsold at the
     termination of the offering.

         (b) Subsequent Exchange Act Documents. The undersigned Registrant
hereby undertakes that, for purposes of determining any liability under the
Securities Act, each filing of the Registrant's annual report pursuant to
section 13(a) or section 15(d) of the Exchange Act (and, where applicable, each
filing of an employee benefit plan's annual report pursuant to section 15(d) of
the Exchange Act) that is incorporated by reference in the Registration
Statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.

         (c) Indemnification. Insofar as indemnification for liabilities arising
under the Securities Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of

                                       5

appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.

                                       6

                                   SIGNATURES

         The Registrant. Pursuant to the requirements of the Securities Act of
1933, the Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Des Moines, Iowa on October 22, 2001.

                                   PRINCIPAL FINANCIAL GROUP, INC.

                                   By:  /s/ J. Barry Griswell
                                        ----------------------------------------
                                        Name:  J. Barry Griswell
                                        Title:  President and Chief Executive
                                                Officer and Director

                                       7

         Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

Signatures                              Title                                    Date
----------                              -----                                    ----

         /s/ David J. Drury             Chairman of the Board, Chairman and      October 22, 2001
------------------------------------    Director
           David J. Drury

        /s/ J. Barry Griswell           President and Chief Executive Officer    October 22, 2001
------------------------------------    and Director
          J. Barry Griswell

        /s/ Michael H. Gersie           Executive Vice President and Chief       October 22, 2001
------------------------------------    Financial Officer
          Michael H. Gersie             (principal financial officer and
                                        principal accounting officer)

                  *                     Director                                 October 22, 2001
------------------------------------
          Betsy J. Bernard

                  *                     Director                                 October 22, 2001
------------------------------------
        Jocelyn Carter-Miller

                  *                     Director                                 October 22, 2001
------------------------------------
            Daniel Gelatt

                  *                     Director                                 October 22, 2001
------------------------------------
          Sandra L. Helton

                  *                     Director                                 October 22, 2001
------------------------------------
         Charles S. Johnson

                  *                     Director                                 October 22, 2001
------------------------------------
           William T. Kerr

                  *                     Director                                 October 22, 2001
------------------------------------
               Lee Liu

                                       8

                                                                           

                  *                     Director                                 October 22, 2001
------------------------------------
        Victor H. Loewenstein

                  *                     Director                                 October 22, 2001
------------------------------------
          Ronald D. Pearson

                  *                     Director                                 October 22, 2001
------------------------------------
          Federico F. Pena

                  *                     Director                                 October 22, 2001
------------------------------------
          Donald M. Stewart

                  *                     Director                                 October 22, 2001
------------------------------------
        Elizabeth E. Tallett

* By:   /s/ Michael H. Gersie
     -------------------------------------------
        Michael H. Gersie, Attorney-in-Fact

                                       9

                                Index to Exhibits

 Exhibit No.     Description of Exhibit
 -----------     ----------------------

 4.1             Form of Certificate for the Common Stock of Principal Financial
                 Group, Inc., par value $0.01 per share, previously filed as
                 Exhibit 4.1 to Amendment No. 1 of Principal Financial Group,
                 Inc.'s Registration Statement on Form S-1 (No. 333-62558) and
                 incorporated herein by reference.

 4.2             Form of Stockholder Rights Agreement, previously filed as
                 Exhibit 4.2 to Principal Financial Group, Inc.'s Registration
                 Statement on Form S-1 (No. 333-62558) and incorporated herein
                 by reference.

 5.1*            Opinion of Debevoise & Plimpton.

 23.1*           Consent of Ernst & Young LLP.

 23.2            Consent of Debevoise & Plimpton (included in Exhibit 5.1).

 24.1            Powers of Attorney, previously filed as Exhibit 24.1 to
                 Principal Financial Group, Inc.'s Registration Statement on
                 Form S-1 (No. 333-62558) and incorporated herein by reference.

 99.1            Principal Financial Group, Inc. Stock Incentive Plan,
                 previously filed as Exhibit 10.1 to Principal Financial Group,
                 Inc.'s Registration Statement on Form S-1 (No. 333-62558) and
                 incorporated herein by reference.

 99.2            Principal Financial Group Long-Term Performance Plan,
                 previously filed as Exhibit 10.2 to Principal Financial Group,
                 Inc.'s Registration Statement on Form S-1 (No. 333-62558) and
                 incorporated herein by reference.

 99.3            Principal Financial Group, Inc. Directors Stock Plan,
                 previously filed as Exhibit 10.4 to Principal Financial Group's
                 Registration Statement on Form S-1 (No. 333-62558) and
                 incorporated herein by reference.

 99.4*           Principal Financial Group, Inc. Employee Stock Purchase Plan

 *filed herewith

                                       10

                                                                     EXHIBIT 5.1

                                                                October 22, 2001

Principal Financial Group, Inc.
711 High Street
Des Moines, Iowa 50392

Dear Sirs or Mesdames:

               We have acted as counsel to Principal Financial Group, Inc., a
Delaware corporation (the "Company"), in connection with the filing by the
Company of a Registration Statement on Form S-8 (the "Registration Statement")
relating to 20,000,000 shares of the Company's common stock, par value $.01 per
share (the "Common Stock"), to be issued pursuant to the Principal Financial
Group, Inc. Stock Incentive Plan, the Principal Financial Group Long-Term
Performance Plan, the Principal Financial Group, Inc. Directors Stock Plan and
the Principal Financial Group, Inc. Employee Stock Purchase Plan (together, the
"Plans").

               We have examined the originals, or copies certified or otherwise
identified to our satisfaction, of the Plans and such other corporate records,
documents, certificates or other instruments as in our judgment are necessary or
appropriate to enable us to render the opinion set forth below.

               Based on the foregoing, we are of the opinion that authorized but
not previously issued shares of Common Stock which may be issued under the Plans
have been duly authorized and when issued in accordance with the terms of the
Plans will be validly issued, fully paid and non-assessable.

               We hereby consent to the filing of this opinion as an exhibit to
the Company's Registration Statement. In giving such consent, we do not thereby
admit that we are within the category of persons whose consent is required under
Section 7 of the Securities Act of 1933 or the rules and regulations of the
Securities and Exchange Commission thereunder.

                                        Very truly yours,

                                        /s/ Debevoise & Plimpton

                                                                    EXHIBIT 23.1

                         CONSENT OF INDEPENDENT AUDITORS

We consent to the incorporation by reference of our reports dated February 2,
2001, except for Note 16 to the consolidated financial statements as to which
the date is September 11, 2001, in the Registration Statement (Form S-8 dated
October 22, 2001) pertaining to the Principal Financial Group, Inc. Stock
Incentive Plan, Principal Financial Group Long-Term Performance Plan, Principal
Financial Group, Inc. Directors Stock Plan and the Principal Financial Group,
Inc. Employee Stock Purchase Plan with respect to the consolidated financial
statements and schedules of Principal Financial Group, Inc. for the year ended
December 31, 2000 included in Amendment No. 4 to its Registration Statement
(Form S-1 No. 333-62558) and related Prospectus filed with the Securities and
Exchange Commission on October 22, 2001.

                                                       /s/ ERNST & YOUNG LLP

Des Moines, Iowa
October 19, 2001

                                                                    EXHIBIT 99.4

                         PRINCIPAL FINANCIAL GROUP, INC.
                          EMPLOYEE STOCK PURCHASE PLAN

                                    SECTION 1

                                     PURPOSE

     The purpose of the Principal Financial Group, Inc. Employee Stock Purchase
Plan (the "Plan") is to encourage and facilitate stock ownership by Employees by
providing a continued opportunity to purchase Common Stock through voluntary
after-tax payroll deductions and cash contributions. The Plan is intended to be
a qualified employee stock purchase plan under Section 423 of the Code.

                                    SECTION 2

                                   DEFINITIONS

     2.1 Definitions. Whenever used herein, the following terms shall have the
respective meanings set forth below:

          a) "Board" means the Board of Directors of the Company.

          b) "Cash Contributions" means an Employee's contributions, other than
     Payroll Contributions, pursuant to Section 5.4.

          c) "Code" means the Internal Revenue Code of 1986, as amended.

          d) "Committee" means the Human Resources Committee of the Board or
     such other committee of the Board as the Board shall designate from time to
     time.

          e) "Common Stock" means shares of the Common Stock of the Company.

          f) "Company" means Principal Financial Group, Inc., a corporation
     organized under the laws of the State of Delaware, and any successor
     thereto.

          g) "Compensation" means base salary, incentive compensation and
     overtime, determined without regard to any salary reduction contributions
     under a qualified cash or deferred arrangement or a cafeteria plan, in each
     case meeting the applicable requirements of the Code. With respect to
     employees of the Company and its Subsidiaries who are compensated on a
     commission basis, such commissions shall be treated as base salary on such
     basis and in accordance with such rules as the Plan Administrator shall
     from time to time establish.

          h) "Custodian" means the bank, trust company or other entity selected
     by the Plan Administrator to serve as the custodian under the Plan.

          i) "Date of Exercise" means any date or dates during an Offering
     Period that the Plan Administrator shall designate as a Date of Exercise,
     provided that, if no other Exercise Date shall have occurred in any
     calendar year, the last trading day of such calendar year shall be a Date
     of Exercise.

          j) "Date of Grant" means the date upon which an Option is granted, as
     set forth in Section 5.2.

          k) "Effective Date" means the effective date of the Plan of
     Conversion.

          l) "Employee" means each officers or common law employee of the
     Company and of any Subsidiary whose employees are expressly permitted to
     participate in the Plan by the Plan Administrator. To the extent determined
     by the Plan Administrator, insurance agents of the Company or any of its
     Subsidiaries who are statutory (but not common law employees) may also be
     permitted to participate in the Plan.

          m) "Employer" means the Company and each Subsidiary whose employees
     are expressly permitted to participate in the Plan by the Plan
     Administrator.

          n) "Fair Market Value" means, on any date, the closing price of a
     share of Common Stock as reported on the principal national stock exchange
     on which the stock is traded, or the last reported sales transaction on the
     principal national system of automatic quotations on which transactions in
     the Common Stock are reported, on such date. In the event that there are no
     Common Stock transactions reported on such exchange or such quotation
     system on any such date, Fair Market Value shall mean the closing price of
     a share of Common Stock on the last trading day on which transactions in
     the Common Stock were so reported.

          o) "Individual Account" means a separate account maintained by the
     Custodian for each Employee participating under Section 5 hereof.

          p) "Offering Period" means the period of time from the Date of Grant
     of any Option and until the expiration of the Option term of such Option.

          q) "Option" means an option to purchase Common Shares granted to an
     Employee under Section 5.

          r) "Option Price" has the meaning set forth in Section 5.6.

          s) "Parent" means any corporation, other than the Company, in an
     unbroken chain of corporations ending with the Company if, at the time of
     the granting of the Option, each of the corporations other than the Company
     owns stock possessing fifty percent (50%) or more of the total combined
     voting power

                                       2

     of all classes of stock in one of the other corporations in the chain.

          t) "Payroll Contributions" means an Employee's after-tax contributions
     of Compensation by payroll deduction pursuant to Section 5.4.

          u) "Plan Administrator" means a committee comprised solely of
     directors, officers or employees of the Company or any of its Subsidiaries
     selected by the Committee.

          v) "Plan of Conversion" means the Plan of Conversion of Principal
     Mutual Holding Company.

          w) "Subsidiary" means any corporation, other than the Company, in an
     unbroken chain of corporations beginning with the Company if, at the time
     of the granting of the Option, each of the corporations owns stock
     possessing fifty percent (50%) or more of the total combined voting power
     of all classes of stock in one of the other corporations (other than the
     Company) in the chain. Notwithstanding the foregoing, so long as the Plan
     Administrator determines that it will not affect the ability of the Plan to
     meet the requirements of Section 423 as to Employees of the Company and
     Subsidiaries described in the immediately preceding sentence, the term
     Subsidiary may also include any other entity in which the Company owns,
     directly or indirectly, at least 50% of the equity interests in such entity
     and has effective control over such entity.

          x) "Terminating Event" means a participating Employee's termination of
     employment for any reason or any other event which causes such Employee to
     no longer meet the requirements of Section 4.

          y) "Total Contributions" means, with respect to an Employee on any
     given date, the aggregate of the Payroll Contributions and Cash
     Contributions of such Employee on or prior to such date.

                                    SECTION 3

                                 ADMINISTRATION

     The Plan shall be administered by the Plan Administrator. The Plan
Administrator shall have authority to make rules and regulations for the
administration of the Plan, and its interpretations and decisions with regard
thereto shall be final and conclusive. The Plan Administrator may delegate
responsibility for the day to day operation and administration of the Plan to
any officer or employee or group of officers or employees of the Company or any
of its Subsidiaries. Notwithstanding anything else contained in the Plan to the
contrary, no action shall be taken, and no Option shall be granted or
distribution made, under the Plan which contains any term or condition that
would violate the provisions of the Plan of Conversion.

                                       3

                                    SECTION 4

                                   ELIGIBILITY

     4.1 General Rule. Except as otherwise provided herein, all Employees shall
be eligible to participate in the Plan.

     4.2 Exclusions. Notwithstanding the provisions of Section 4.1, the Plan
Administrator, at its sole discretion, may (but is not required to) exclude from
participation in any offering made under the Plan any employees (i) whose
customary employment is twenty (20) hours or less per week, (ii) who are
temporary or seasonal employees whose employment is for not more than five (5)
months in any calendar year, (iii) who are highly compensated employees or any
class of highly compensated employees (within the meaning of Section 414(q) of
the Code), but only to the extent that such exclusion is necessary to satisfy
the requirements of the Plan of Conversion or (iv) who terminates employment or
are terminated for any reason. Additionally, notwithstanding Section 4.1, any
Employee who, after an Option is granted, owns stock (as defined by Sections
423(b)(3) and 424(d) of the Code) possessing five percent (5%) or more of the
total combined voting power or value of all classes of stock of the Company or
of a Parent or any Subsidiary, shall not be entitled to participate in offerings
under the Plan. For the avoidance of doubt, there shall also be excluded from
participation hereunder any Employees of any Subsidiary (including, without
limitation, any foreign Subsidiary) which has not been designated by the Plan
Administrator as an Employer hereunder.

                                    SECTION 5

                                 STOCK PURCHASES

     5.1 Stock to Be Issued. Subject to the provisions of Sections 5.7 and 9.4,
the number of shares of Common Stock issuable pursuant to Options under the Plan
shall not exceed two percent (2%) of the shares of Common Stock outstanding
immediately following consummation of the initial public offering of the
Company's Common Stock. The shares to be delivered pursuant to Options under the
Plan may consist, in whole or in part, of authorized but unissued shares, not
reserved for any other purpose, or shares acquired by the Custodian for purposes
of the Plan in the market.

     5.2 Grant of Options. Subject to Section 4, the Company shall offer Options
under the Plan to all Employees. Options will be granted on such dates as shall
be determined by the Plan Administrator, but in no event shall any Offering
Period commence earlier than 30 days after the Effective Date of the Plan of
Conversion. The term of each Option shall end on the date which is twenty-four
(24) months from the Date of Grant (or on such earlier date as shall be
determined by the Plan Administrator). Subject to the provisions of Section 5.4,
the number of whole shares of Common Stock subject to each Option shall be the
lesser of (i) the quotient of (A) the Total Contributions

                                       4

made by each participating Employee in accordance with Section 5.4 for the
Offering Period divided by (B) the Option Price for each share of Common Stock
purchased pursuant to such Option, excluding all fractions, or (ii) such maximum
number of shares as may be established by the Plan Administrator, which may be
established as a fixed number or vary based on a predetermined formula.

     5.3 Participation. An Employee who meets the requirements in Section 4 may
participate in the Plan under this Section 5 by completing and forwarding an
enrollment form to the Plan Administrator or its designee, and by satisfying
such other conditions as the Plan Administrator shall establish from time to
time. Eligible Employees who elect to participate in the Plan shall at the time
of such election authorize a payroll deduction from the Employee's Compensation
to be made as of any future payroll period. Any election to authorize payroll
deductions shall be effective on such date as the Plan Administrator may
determine after the date of the receipt of the enrollment form by the Plan
Administrator or its designee.

     5.4 Employee Contributions. There shall be an Individual Account for each
participating Employee to which shall be credited (i) the amount of any Payroll
Contributions and Cash Contributions, (ii) interest on the Employee's Total
Contributions at a rate to be determined by the Plan Administrator or pursuant
to an arrangement approved by the Plan Administrator for the period from the
date each such contributions is credited to such Individual Account until
applied to the exercise of Options upon a Date of Exercise and (iii) the number
of full or fractional Common Shares that are purchased by such Employee pursuant
to the terms of the Plan. An Employee may (i) authorize Payroll Contributions in
terms of whole percentages of Compensation (or on such other basis as the Plan
Administrator may establish) and (ii) to the extent permitted by the Plan
Administrator, an Employee who has made Payroll Contributions may also deliver
to the Custodian one or more Cash Contributions, each of which shall be for a
minimum of $100 (or such greater amount or lesser amount as the Plan
Administrator shall determine), by personal check or other cash equivalent
acceptable to the Custodian, provided, however, that no Cash Contribution shall
be permitted at any time if such Cash Contribution shall cause the Plan to fail
to meet the requirements of Section 423 of the Code. An Employee shall not be
permitted (x) to make Total Contributions in the aggregate for any Offering
Period in excess of the lesser of (1) $10,000 (or such greater or lesser amount
as the Plan Administrator shall determine) or (2) ten percent (10%) of such
Employee's annual Compensation or (y) to purchase Common Shares pursuant to
Options under the Plan or under any other employee stock purchase plan of the
Company or a Parent or any Subsidiary which is intended to qualify under Section
423 of the Code, at a rate which exceeds $25,000 in Fair Market Value
(determined at the time the Option is granted) for each calendar year in which
any Option granted to such Employee is outstanding at any time. Except as
provided in Section 5.8, if an Employee has a Terminating Event, (i) such
Employee may not make further Payroll Contributions or Cash Contributions and
(ii) his or her outstanding Options shall terminate and any amount of cash then
credited to his or her Individual Account shall be returned to the

                                       5

Employee. Employees on short-term disability or a paid leave of absence may
continue to make Payroll Contributions and Cash Contributions.

     5.5 Exercise of Options. Unless a participating Employee shall request a
withdrawal of the cash balance in the Employee's Individual Account prior to a
Date of Exercise, the cash balance on each such Date of Exercise shall be used
to exercise Options to the extent that such balance is sufficient to purchase
whole shares at the Option Price.

     5.6 Option Price. Except as provided in Section 5.8, the Option Price per
share of Common Stock (the "Option Price") to be paid by each participating
Employee on each exercise of the Employee's Option shall be an amount equal to
eighty-five percent (85%)(or such greater percentage as the Committee or the
Plan Administrator may authorize) of the Fair Market Value of a share of Common
Stock on the Date of Grant or, if so specified by the Plan Administrator prior
to the Date of Grant, the lesser of (i) eighty-five percent 85% (or such greater
percentage as the Committee or the Plan Administrator may authorize) of the Fair
Market Value of a share of Common Stock on the Date of Grant or (ii) eighty-five
percent 85% (or such greater percentage as the Committee or Plan Administrator
may authorize) of the Fair Market Value of a share of Common Stock on the Date
of Exercise.

     5.7 Canceled, Terminated or Forfeited Options. Any shares of Common Stock
subject to an Option which for any reason is canceled, terminated or otherwise
settled without the issuance of any Common Stock shall again be available for
Options under the Plan.

     5.8 Change in Employment Status Due to Death or Disability. Upon a
Terminating Event resulting from the participating Employee's death, the
Employee's beneficiary (as defined in Section 9.3) shall have the right to
elect, by written notice given to the Plan Administrator prior to the next
following Date of Exercise:

          a) to withdraw all of the Total Contributions credited to the deceased
     Employee's Individual Account under the Plan, or

          b) to exercise the deceased Employee's Options for the number of full
     shares of Common Stock which the balance in the deceased Employee's
     Individual Account will purchase at the Date of Exercise next following the
     Employee's death.

Upon a Terminating Event resulting from the participating Employee's permanent
disability (as determined by the Plan Administrator), the Employee shall have
the same right to exercise the Employee's Options, pursuant to the same terms
and conditions, as would the beneficiary in a case of death. In the event that
no written notice of election pursuant to this Section 5.8 shall be received by
the Plan Administrator at least ten (10) business days prior to the date of
exercise, the beneficiary or the permanently disabled

                                       6

Employee, as the case may be, shall be deemed to have elected not to withdraw
the amount credited to the Employee's Individual Account.

     5.9 Foreign Employees. To the extent that an Employee is principally
employed outside the United States and paid in a currency other than U.S.
dollars, the Plan Administrator shall adopt uniform procedures for the
conversion of Payroll Contributions and Cash Contributions into U.S. dollar
equivalents for the purpose of exercising Options.

                                    SECTION 6

                       DEDUCTION CHANGES; PLAN WITHDRAWALS

     6.1 Deduction Changes. Once an Employee has authorized Payroll
Contributions for an Offering Period, the Employee may change the selected rate
of Payroll Contributions by written notice to the Plan Administrator. Any such
change shall be given effect as soon as administratively practicable after the
date such notice is received. Unless the Plan Administrator otherwise
determines, if an Employee ceases to make Payroll Contributions during an
Offering Period at any time prior to a Terminating Event, any cash balance then
held in the Employee's Individual Account shall automatically be distributed to
such Employee as soon as practical after the effective date of such cessation;
provided that if an Employee is on an unpaid leave for a period of less than
ninety (90) days, the Employee may suspend contributions during such leave, so
long as the Employee recommences such contributions immediately upon return to
work. Unless an Exercise Date shall have occurred during such ninety (90) day
period, an Employee who is on an unpaid leave lasting more than ninety (90) days
shall be deemed to have had a Terminating Event retroactive to the date the
Employee's leave commenced and any amounts held in the Employee's Individual
Account shall be distributed to the Employee as soon as possible following the
ninetieth (90th) day of such unpaid leave.

     6.2 Withdrawals During Employment. An Employee may at any time (subject to
such notice requirements as the Plan Administrator may from time to time
prescribe), and for any reason, cease participation in the Plan and withdraw all
or any portion of the Common Stock and cash, if any, in his Individual Account
pursuant to Section 8. The Employee may thereafter recommence participation on
the date the Plan Administrator shall determine following completion of
re-enrollment pursuant to Section 5.3.

                                    SECTION 7

                            ISSUANCE OF CERTIFICATES

     Unless and until distributed to an Employee (i) at the Employee's request,
(ii) at the discretion of the Plan Administrator or (iii) in connection with the
Employee's termination of employment, all shares of Common Stock acquired
pursuant to the Plan shall be held by the Custodian. While maintained by a
Custodian, all shares of Common

                                       7

Stock shall be held in the name of the Custodian or its nominee, or in street
name. The Company shall issue certificates to an Employee who is to receive a
distribution of shares pursuant to Section 8 as soon as practical following the
event giving rise to such distribution under such Section 8. Unless, and solely
to the extent that, the Plan Administrator shall adopt procedures to permit
exceptions to this requirement, such certificates may be registered only in the
name of the Employee. Notwithstanding the foregoing, the Company shall issue
certificates to an Employee upon such Employee's request to the Plan
Administrator or its designee as soon as practical following such request.

                                    SECTION 8

                          WITHDRAWALS AND DISTRIBUTIONS

     All or a portion of the Common Stock allocated to an Employee's Individual
Account may be withdrawn by an Employee at any time. Upon termination of
employment, all amounts and Common Stock held for the benefit of any Employee
shall be distributed to such Employee. Any withdrawal or other distribution
shall be made in the form of cash or stock, at the election of the Employee. To
the extent of a withdrawal or distribution of an Employee's Common Stock is made
in the form of cash, the Employee shall receive an amount per share equal to the
proceeds received from the sale of such shares net of the Employee's allocable
share of any related brokerage fees, other expenses incurred in connection with
the sale of such shares and any applicable tax withholding. All fractional
shares shall be paid in cash at the average sale price of such shares sold on
behalf of Employees on the day of such sales.

                                    SECTION 9

                            MISCELLANEOUS PROVISIONS

     9.1 Withholding. The Employer or its designee may make such provisions and
take such action as it may deem necessary or appropriate for the withholding of
any taxes which the Employer is required by law or regulation of any
governmental authority, whether Federal, state or local, to withhold in
connection with Payroll Contributions and the distribution of Common Stock or
cash pursuant to the Plan. Each participating Employee, however, shall be
responsible for the payment of all individual tax liabilities relating to any
such amounts.

     9.2 Rights Not Transferable. Rights under the Plan are not transferable by
a participating Employee other than in accordance with Section 9.3 or by will or
the laws of descent and distribution of the state wherein the Employee is
domiciled at the time of the Employee's death, and are exercisable during the
Employee's lifetime only by the Employee.

                                       8

     9.3 Designation of Beneficiary. Each participating Employee may file a
written designation of a beneficiary who is to receive any Common Shares and/or
cash following the Employee's death; provided that, if the Participant shall not
have designated any beneficiary under this Plan, the Participant's beneficiary
shall be deemed to be the person designated by the Participant under the group
life insurance plan of the Company or a Subsidiary in which such Participant
participates (unless such designated beneficiary is not a Family Member). Each
designation made hereunder will revoke all prior designations by the same
Participant with respect to all Options previously granted (including, solely
for purposes of this Plan, any deemed designation), shall be in a form
prescribed by the Plan Administrator, and will be effective only when received
by the Plan Administrator in writing during the Participant's lifetime. In the
absence of any such effective designation (including a deemed designation),
benefits remaining unpaid at the Participant's death shall be paid to or
exercised by the Participant's surviving spouse, if any, or otherwise to or by
the Participant's estate. Upon the death of a participating Employee and upon
receipt by the Plan Administrator of proof of identity and existence at the
participating Employee's death of a beneficiary validly designated by the
Employee under the Plan, the Plan Administrator shall deliver such Common Shares
and/or cash to such beneficiary. No beneficiary shall, prior to the death of a
participating Employee by whom the beneficiary has been designated, acquire any
interest in the Common Stock or cash credited to a participating Employee under
the Plan.

     9.4 Adjustments Due to Change in Capitalization. In the event of any stock
dividend or stock split, recapitalization (including, but not limited to, the
payment of an extraordinary dividend to the stockholders of the Company),
merger, consolidation, combination, spin off, distribution of assets to
shareholders (other than ordinary cash dividends), exchange of shares, or other
similar corporate change, (i) shares credited to each Employee's Individual
Account shall be adjusted in the same manner as all other outstanding shares of
Common Stock in connection with such event, (ii) the Committee shall determine
the kind of shares which may be acquired under the Plan after such event, and
(iii) the aggregate number of shares of Common Stock available for grant under
Section 5.1 or subject to outstanding Options and the respective exercise prices
applicable to outstanding Options may be appropriately adjusted by the
Committee, in its discretion, and the determination of the Committee shall be
conclusive. Except as otherwise determined by the Committee, a merger or a
similar reorganization which the Company does not survive, a liquidation or
distribution of the assets of the Company, or a sale of all or substantially all
of the assets of the Company, shall cause the Plan to terminate and all Common
Stock and cash, if any, in the Individual Accounts of participating Employees
shall be distributed to each Employee pursuant to Section 8 as soon as practical
unless any surviving entity agrees to assume the obligations hereunder.

     9.5 Amendment of the Plan. Subject to Section 3 hereof, the Board may at
any time, or from time to time, amend the Plan in any respect; provided that
shareholder approval shall be required to amend the Plan to (i) change the
number of shares of Common Stock reserved for issuance under Section 5.1 of the
Plan, (ii) decrease the

                                       9

Option Price below a price computed in the manner stated in Section 5.6, or
(iii) alter the requirements for eligibility to participate in the Plan under
Section 5. No amendment, modification, or termination of the Plan shall in any
manner adversely affect the rights of any Employee under the Plan, without the
consent of the Employee. The Plan shall terminate at any time at the discretion
of the Board or its delegate. Upon termination of the Plan, all Common Stock and
cash, if any, in the Individual Accounts of participating Employees shall be
distributed to each Employee pursuant to Section 8 as soon as practical
thereafter.

     9.6 Requirements of Law. The Company's obligation to deliver Common Stock
under the Plan shall be subject to all applicable laws, rules and regulations,
and to such approvals by any governmental agencies or national securities
exchanges as may be required. Notwithstanding anything in the Plan to the
contrary, with respect to any Participant who is resident outside of the United
States, the Committee may, in its sole discretion, amend the terms of the Plan
in order to conform such terms with the requirements of local law or to meet the
objectives of the Plan. The Committee may, where appropriate, establish one or
more sub-plans for this purpose.

     9.7 Custodial Arrangement. All cash and Common Stock allocated to an
Employee's Individual Account under the Plan shall be held by the Custodian in
its capacity as a custodian for the Employee with respect to such cash and
Common Stock. Nothing contained in the Plan, and no action taken pursuant to the
Plan, shall create or be construed to create a trust of any kind, or a fiduciary
relationship between the Company and its officers or the Committee or the Plan
Administrator or the Custodian, on the one hand, and any Employee, the Company
or any other person or entity, on the other hand.

     9.8 No Right to Continuous Employment. The Plan and any right to purchase
Common Stock granted hereunder shall not confer upon any Employee any right with
respect to continuance of employment by the Company or any Subsidiary, nor shall
they restrict or interfere in any way with the right of the Company or any
Subsidiary by which an Employee is employed to terminate the Employee's
employment at any time.

     9.9 Indemnification. Each member of the Board and the Committee and each
member of the Plan Administrator shall be indemnified and held harmless by the
Company and each Employer against and from any loss, cost, liability, or expense
that may be imposed upon or reasonably incurred by such member of the Board, the
Committee or Plan Administrator in connection with or resulting from any claim,
action, suit, or proceeding to which such member may be made a party or in which
such member may be involved by reason of any action taken or failure to act
under the Plan (in the absence of bad faith) and against and from any and all
amounts paid by such member in settlement thereof, with the Company's approval,
or paid by such member in satisfaction of any judgment in any such action, suit,
or proceeding against such member, provided that such member shall give the
Company an opportunity, at its own expense, to handle and defend the same before
such member undertakes to handle and defend it individually.

                                       10

The foregoing right of indemnification shall not be exclusive and shall be
independent of any other rights of indemnification to which any such person may
be entitled under the Company's Certificate of Incorporation or By-Laws, by
contract, as a matter of law, or otherwise.

     9.10 No Limitation on Compensation. Nothing in the Plan shall be construed
to limit the right of the Company to establish other plans.

     9.11 No Constraint on Corporate Action. Nothing in this Plan shall be
construed (i) to limit, impair or otherwise affect the Company's right or power
to make adjustments, reclassifications, reorganizations or changes of its
capital or business structure, or to merge or consolidate, or dissolve,
liquidate, sell, or transfer all or any part of its business or assets or (ii)
except as provided in Section 9.5, to limit the right or power of the Company or
any of its Subsidiaries or affiliates to take any action which such entity deems
to be necessary or appropriate.

     9.12 Effective Date. This Plan shall be effective as of the Effective Date
of the Plan of Conversion.

     9.13 Governing Law. The Plan shall be construed in accordance with and
governed by the laws of the State of Delaware, without regard to principles of
conflict of laws.

On behalf of the Board of Directors of the Company, this Employee Stock Purchase
Plan has been executed this ____ day of June, 2001.

By:
    ------------------------
C. Daniel Gelatt, Jr.

                                       11